TAP TURNERS AND GAME CHANGERS: LESSONS FOR MELBOURNE, VICTORIA AND AUSTRALIA FROM AFFORDABLE HOUSING SYSTEMS IN VANCOUVER, PORTLAND AND TORONTO ...
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TAP TURNERS AND GAME CHANGERS: LESSONS FOR MELBOURNE, VICTORIA AND AUSTRALIA FROM AFFORDABLE HOUSING SYSTEMS IN VANCOUVER, PORTLAND AND TORONTO SEPTEMBER 2018 Carolyn Whitzman TRANSFORMING HOUSING MELBOURNE SCHOOL OF DESIGN UNIVERSITY OF MELBOURNE
ACKNOWLEDGEMENT
The author would like to acknowledge all those in Vancouver, Portland and
Toronto who informed this research, and thank Kate Raynor and Matthew
Palm for their assistance in thinking through affordable housing systems.
We would also like to thank the following organisations for their support
and assistance with the development of this project::
The Lord Mayor’s Charitable Foundation
The Brotherhood of St Laurence
Launch Housing
The University of Melbourne, Faculty of Architecture, Building and
Planning
ISBN 978-0-7340-5493-7
Published by
Transforming Housing
Melbourne School of Design
Faculty of Architecture, Building and Planning
The University of Melbourne
www.msd.unimelb.edu.au
Reference: Whitzman, C. (2018) Tap Turners and Game Changers: Lessons for Melbourne, Victoria and Australia from
Affordable Housing Partnerships in Vancouver, Portland and Toronto. Melbourne: Melbourne School of Design, University of
Melbourne
Melbourne
School of Design
Faculty of Architecture,
Building and Planning
SUMMARY
This report is a sequel to a 2015 analysis of affordable housing systems (partnerships, policies and outcomes) in
three comparable cities to Melbourne – Vancouver and Toronto, Canada and Portland, US. Three years after the
initial report, divergence in affordable housing trajectories has intensified:
»» Vancouver has created the most social and affordable housing, both new construction and renewed
stock, in the past three years: about 15 times as much per capita as Melbourne, with equally limited
federal government support until the past year. Local and provincial government, investors, and non-profit
developers have developed six integrated ‘game-changers’, which together are increasing capacity to scale
up a viable non-speculative housing sector. Although outcomes are not yet meeting the needs of low and
moderate income households, they show promise of growing suitable supportive, social and rental housing
to the point where ‘affordable housing for all’ is more than a meaningless slogan.
»» Portland has been able to scale up affordable housing for very low income residents, through imaginative
use of new funding mechanisms. Housing affordability is better than the other cities in this study, although
may primarily be due to unintentional and lasting impacts of the Global Financial Crisis, rather than local
regulatory steering. In this report, we will be referring to four integrated tap turners that have increased
capacity.
»» Toronto has been unsuccessful in developing new social housing, and has lost considerable social housing,
because of very poor leadership from local and provincial government.
The report concludes with 10 lessons for the Victorian State Government (and local and federal governments,
private developers, non-profit housing providers, investors and researchers) in three categories: evidence base,
mechanisms, and partnerships.
Evidence Base
1
The Victorian State Government has already taken two vital first steps: a clear and shared definition of
affordable housing, including defining and prioritising the needs of very low (below 50% of AMI), low (50-80%
AMI) and moderate (80-120%) income households; and stating, through the goals of its Homes for Victorians
strategy, that it sees housing as a human right, not as a vehicle for speculative wealth generation;
2
The next step is a transparent mechanism to develop accurate models of housing need broken down by
income type and household size (including high income households). This modelling should also consider
household type (single parent families, older women and men, young singles aging out of foster care, racialized
communities such as indigenous people, people with disabilities and mental illness).
Targets and Mechanisms
3 Ambitious state-level housing and tenure diversity targets should be set, with the priority being very low
income households in housing stress and at risk of homelessness (e.g. enabling the provision of 470,000 units
of lower income housing over 10 years, to meet the current deficit and begin to address a population growth):
4 The State Government needs to provide spatialized targets for local government based on their
infrastructure capacity. The State Government should also work with local governments to publish
transparent and accurate monitoring data online, including annual reports. It should require local
governments to make public an online list of current public land holdings and also require all developers
(private and non-profit) to make public online costings of any form of affordable housing receiving direct or
indirect subsidy. The State Government should be prepared to link increased social and transport investment
with meeting housing targets.
3 TRANSFORMING HOUSING TAP TURNERS AND GAME CHANGERS:
Lessons for Melbourne, Victoria and Australia from Affordable Housing Systems in Vancouver, Portland and TorontoThe State Government should lease appropriate and well located public land for social housing, including
5
scaling up modular housing for homeless people as an interim use. The State Government should maximise
the value of affordable housing subsidy and counter-balance housing speculation by directly investing in social
housing infrastructure (including issuing bonds to finance affordable housing) and increasing the capacity of
non-profits to provide mixed lower and moderate income developments on larger sites with a cross-subsidy
model that ensures long-term viability with minimal government subsidy. The State Government can
guarantee construction loans and mortgages; support the development of social investment institutions;
provide property tax and development charge exemptions for social housing; and provide expedited
approvals processes for social housing.
The State Government should promote scaling up a private market multi-family lower income rental and
6 shared equity homeownership sector, through supply-side mechanisms such as loan guarantees in return
for rent/cost guarantees, land tax exemptions, expedited approvals processes, and disallowing conversion
of multi-family rental buildings to condominium. State government also needs to improve demand-side
issues such as security of private market rental as a housing choice, through stronger rights to long term
leases; limiting annual rent increases; and more strongly regulating ‘rent eviction’. The State Government
should support accessory units (both ‘laneway housing’ and single family house subdivision) and 3-4 storey
apartment buildings in neighbourhoods with good infrastructure through disallowing single family housing
zones in areas with good infrastructure.
State and local governments should prioritise curbing housing speculation and displacement of lower income
7 residents from well-serviced areas through inclusionary zoning that dictates 20% housing affordable to those
at 50% AMI for every new development with rent or house prices above moderate income affordability limits that
are over 20 units (or land/cash in lieu of direct provision).
The Commonwealth and State governments should dampen excessive housing speculation driving housing
8 unaffordability: Most direct levers belong to federal government issue (moving tax exemptions from negative
gearing and capital gains tax exemptions to purpose-built multi-family rental and social housing). The state
government should develop vacancy/ secondary dwelling taxes, luxury home taxes on properties valued at
more than $1,000,000, and foreign ownership taxes, and direct these new revenue streams into affordable
housing.
Enabling Partnerships and Capacity Building
A Victorian Affordable Housing Agency: This would provide a clear State Government lead on developing and
9 monitoring metropolitan and local targets, policy development and evaluation, coordination across multiple
vertical levels of government (federal, state, local) and State government departments (including services for
supportive housing, use of transport, education and health related surplus and lazy land). This could be a role
for a re-purposed Victorian Planning Authority.
The State Government should provide capacity improvement for local governments to improve planning
10 mechanisms, social investors to increase funding for social and affordable housing (through matching funding),
encourage social housing providers to bundle assets and collaborate on bids for large sites, and support a new
generation of build to rent affordable housing private developers.
4 TRANSFORMING HOUSING TAP TURNERS AND GAME CHANGERS:
Lessons for Melbourne, Victoria and Australia from Affordable Housing Systems in Vancouver, Portland and TorontoTABLE OF CONTENTS
Summary.................................................................................................................................................................................3
Acronyms and Definitions Used in This Report......................................................................................................................6
US-Canada Politics Translation Guide.....................................................................................................................................7
1. Introduction: the difference partnerships make................................................................................................ 8
a. Transforming Housing: what do we do?................................................................................................................8
b. The Affordable Housing Crisis in Greater Melbourne...........................................................................................9
c. Deliberative Planning Partnerships for Affordable Housing: the roles of government,
the private sector and non-profits.......................................................................................................................10
d. Learning from Affordable Housing Partnerships in Comparable Cities...............................................................14
2. Vancouver: game changing partnerships scale up affordable housing...............................................................18
a. Federal Investment in Affordable Housing..........................................................................................................19
b. Consolidating Non-Profit Asset Power.................................................................................................................20
c. A Strategic Alliance of Non-Profit Housing Providers..........................................................................................22
d. An Advocacy Alliance Co-Develops a Provincial Housing Strategy......................................................................23
e. The City of Vancouver Provides Leadership at the Local Level............................................................................26
f. The Vienna Model and Cultural Shift...................................................................................................................28
3. Portland: Tap Turning in a Climate of Uncertainty............................................................................................30
a. Purpose-Built Rental Apartments Drive Housing Affordability............................................................................31
b. An Advocacy Alliance ‘Wakes Up’ State and Metro Government........................................................................33
c. A Government-Service Partnership Focused on Very Low Income Households.................................................36
d. Data Transparency and Cost Efficiency Innovation..............................................................................................37
4. Toronto: A Continuing Cautionary Tale.............................................................................................................40
a. Lack of Local Government Leadership.................................................................................................................40
b. Lack of Provincial Government Leadership – And Advocacy Leadership............................................................42
5. What Does a Good Housing System Look Like?................................................................................................44
a. Three Partnership Processes, Policy Outputs and Affordable Housing Outcomes.................................................
b. Needs Assessment................................................................................................................................................45
c. Implementation Mechanisms..............................................................................................................................45
d. Increasing Capacity and Partnerships..................................................................................................................47
6. References.......................................................................................................................................................48
5 TRANSFORMING HOUSING TAP TURNERS AND GAME CHANGERS:
Lessons for Melbourne, Victoria and Australia from Affordable Housing Systems in Vancouver, Portland and TorontoACRONYMS AND DEFINITIONS USED IN THIS REPORT
Affordable Housing: Housing that is appropriately sized for the household, with secure tenure and in adequate maintenance, where
the rent or mortgage plus utilities consumed no more than 30% of gross household income. In Victoria, this definition is applied at
three different tranches of household income:
1. Very Low Income Households: Those earning less than 50% of AMI
2. Low Income Households: Those earning between 50-80% of AMI
3. Moderate Income Households: Those earning between 80-120% of AMI
Higher Income Households: Those earning over 120% AMI
Lower Income Households: Those earning less than 80% of AMI
AMI: Area Median Income, with the ‘area’ being defined as the metropolitan region or census equivalent
Median Middle: A measure used by the international research group Demographia, it is the median household income within a
metropolitan region, divided by the median house price. They argue that a traditional mortgage calculator was that the purchase
price of a dwelling should not exceed three times household income. While a useful comparable measure for homeownership
affordability, it does not reveal anything about lower income rental affordable housing.
Public Housing: Housing owned or managed by government, where rents are usually geared to household income
Community Housing: Housing owned by non-profit entities, usually rental but sometimes shared equity homeownership. Many offer
rents geared to household income, and housing costs are usually subsidized in some way.
Co-operative Housing: In Canada, non-profit housing where rent (called housing charge) is set by residents, who self-manage the
housing. There is no charge to become a member of the co-op and no retained value once the member moves out of the co-op.
Some component (the proportion varies by the government program that helped establish the co-op) has subsidized housing charges,
usually rent geared to household income. A subset of community housing.
Co-op: In Canada, refers to a particular co-operative housing project as well as the sector.
Social Housing: Public plus community housing, also known as non-profit housing
Regulated Rent: A US term that covers both social housing, and any privately provided rental housing covered by inclusionary zoning
or other regulatory arrangements for a deed-restricted rent that is affordable to lower or moderate income households.
Community Land Trust: A non-profit entity that develops and maintains affordable housing and other community assets, usually
owning the land underneath the development.
Shared Equity Homeownership: An arrangement wherein an organisation shares ownership of land and buildings with individual
households. In the US, the household buys a share of their property at a below-market price, and then re-sells their share at a below-
market price, with a NP organisation retaining their share throughout. In Australia, some shared equity schemes have been provided
by private developers, with the ability to re-sell at market prices.
NP: Non-profit (usually used in relation to a housing provider, in this report)
NRAS: National Rental Affordability Scheme (Australia)
SHI: Social Housing Initiative (Australia)
Inclusionary Zoning: Government regulation which requires developers to provide either a proportion of the total dwellings they
develop at a regulated rent or purchase price, or provide land and/or money towards affordable housing in lieu of direct provision.
Luxury Housing: Housing that is not affordable to lower or moderate income households. In Melbourne, a price point of $1 million is
used, which is 12.5 median multiplier and a standard definition in the US.
Naturally Occurring Affordable Housing (NOAH): Private sector housing, often rental, that has been created and maintained without
any government subsidy (but is often maintained through regulatory measures, such as preventing converting to private ownership).
Vancouver, Portland and Toronto are all looking at measures to preserve these dwellings.
CMHC: Canada Mortgage and Housing Corporation, Canada’s national housing agency.
BC: British Columbia, one of 11 provinces in Canada, whose biggest city is Vancouver
CHFBC: Co-operative Housing Federation of BC, the industry association for non-profit self-managed housing in BC.
BCNPHA: BC Non-Profit Housing Association, the industry association representing all community housing providers in BC.
Missing Middle: Informants in Vancouver, Portland and Toronto used this phrase in two different ways. The first is an increasing
emphasis on the affordable housing needs of moderate income households, who are largely locked out of the speculative
homeownership market and increasingly finding well-located rental property difficult to access. The second is locational: creating
affordable housing in middle suburbs with good access to public transportation, jobs and services, but which have been locked out of
redevelopment by restrictive zoning.
6 TRANSFORMING HOUSING TAP TURNERS AND GAME CHANGERS:
Lessons for Melbourne, Victoria and Australia from Affordable Housing Systems in Vancouver, Portland and TorontoVAHA: Vancouver Affordable Housing Agency
LIHTC: Low Income Housing Tax Credit, a US program that provides tax credits in return for affordable rental provision, usually at a
rent set at 30% of a household income as a proportion of AMI, such as 60%).
Section 8: US term for rent assistance to lower income households. Can be provided to households or also allocated to units in social
housing.
GTA: Greater Toronto Area
US-CANADA POLITICS TRANSLATION GUIDE FOR AUSTRALIANS
Because, as discussed in this report, housing policy has often swung wildly depending on the political party in power (at the national,
state/provincial and local levels), and political parties are different in each country (and sometimes different regionally), a brief guide
is provided.
CANADA
Conservative Party: Federally in Canada and in Ontario, considered the major right of centre party (continues to be called the
Progressive Conservative Party in Ontario, although the federal name changed 20 years ago). Federally, the government from 1984-
1993 and 2006-2015. In Ontario, it formed government from 1995-2003 and is the government as of June 2018. While political
parties do not formally operate in Toronto and Vancouver, politicians associated with the Conservative Party were Toronto mayors
from 1998 to 2003 and from 2010-present.
Liberal Party: Federally in Canada and in Ontario, considered the major left of centre party. In BC, it has been considered the right of
centre party since the collapse of the Western Canada-based Social Credit Party in the 1990s. The Liberals formed the BC government
from 2001-17. At the federal level, the Liberals formed the federal government for 36 of the last 55 years: from 1963-79, from 1980-
84, from 1993-2006, and from 2015 to present. In Ontario, it formed government 1985-90 and 2003-18. The Vancouver mayor was
Liberal-affiliated from 1987-2002 and 2005-08.
NDP: The New Democratic Party, a left-wing (democratic socialist) Canadian party. It has never formed a federal government in
Canada, although it was part of a Liberal minority government coalition 1972-74. It formed a provincial government in Ontario 1990-
95 and has formed several provincial governments in BC, from 1991-2001 and again (a minority government with Greens support)
as of 2017. NDP-affiliated politicians were Toronto mayors from 1994-97 and 2004-10. The Vancouver mayor has been from an
environmentalist party affiliated with the Greens since 2008.
US
Republican Party: The right-wing party in the US.
Democrat Party: the left of centre party in the US.
In the US, the President is directly elected (as opposed to in Canada and Australia, where the Prime Minister is chosen by the party
with the most seats in Parliament). The US Congress, like the Parliaments in Canada and Australia, has two houses: the Senate (same
term in all three countries) and the House of Representatives. From 1981 to 1993, the Presidents were Republican but either the
Senate or both houses were Democrat-controlled. From 1993 to 2001, the President was a Democrat but for most of that period, the
Congress was Republican-controlled. This counter-balance led to generally centre-right neoliberal policies. From 2001 to 2007, the
President and the Congress were Republican, which led to a rapid move to the right. Although the Congress went Democrat in 2007,
followed by a Democrat President in 2009, the counter-balance was restored by 2011, when Republicans won control of the House of
Representatives. In 2017, a Republican President and Congress were elected, again leading to a right-wing consensus at the federal
level.
In contrast, Oregon and Portland have been dominated by Democrats. Mayors of Portland have been Democrats since 1980 (with
one left wing independent associated with that party from 1985-92). Governors of Portland have been Democrats since 1987, and
although the Legislative Assembly has had a Republican majority at times in the 1990s, both houses have been under Democratic
control since 2012. There is thus a left-of-centre consensus in Oregon.
7 TRANSFORMING HOUSING TAP TURNERS AND GAME CHANGERS:
Lessons for Melbourne, Victoria and Australia from Affordable Housing Systems in Vancouver, Portland and Toronto1.
INTRODUCTION:
THE DIFFERENCE PARTNERSHIPS MAKE
Transforming Housing: what do we do?
Systems don’t change until people intentionally change them
(Stephanie Allen, Catalyst non-profit housing development, Vancouver).
Since March 2013, the Transforming Housing Research Network has been dedicated to increasing the amount, location
and quality of affordable housing in metropolitan Melbourne. The work has been led by researchers in urban
planning, property development and architecture at the Melbourne School of Design at the University of Melbourne,
working with researchers in geography, economics, public health and civil engineering.
The four objectives of our research have been:
1. Policy reform, development and advocacy
2. Innovative project development, delivery support and evaluation
3. Industry capacity building
4. Research capacity building, embedded action research, research dissemination and influence
Transforming Housing has received support, over the past five years, from a range of key housing actors, including:
»» the Victorian state government: the Parliament of Victoria; Places Victoria [now Development Victoria], the
public land development authority; the Metropolitan Planning Authority [now the Victorian Planning Authority],
the new suburb and urban renewal advisory authority; and the Department of Environment, Water, Land, and
Planning
»» Local government: the City of Melbourne, comprising the inner-most of 32 local governments in metropolitan
Melbourne; and the City of Port Philip, the local authority immediately south of central Melbourne
»» Philanthropic investors: the Lord Mayors Charitable Foundation, a community foundation that works to connect
people, ideas and funding to create positive social change and address Melbourne’s future needs – our major
funder since 2016
»» Non-profit housing developers and providers: the Brotherhood of St. Laurence, which undertakes programs
and research to address poverty in Australia; Launch Housing, a Melbourne-based provider of housing and
homelessness services; and Melbourne City Mission, a service provider to low income individuals and households
»» Private sector housing developers: the Urban Development Institute (Victorian chapter); and the Property
Council of Australia (Victorian division); both industry bodies; and Australand [now Frasers], a major property
development firm.
We have also received advice from some of the leading thinkers in Victoria, including MGS Architects, one of the most
8 TRANSFORMING HOUSING TAP TURNERS AND GAME CHANGERS:
Lessons for Melbourne, Victoria and Australia from Affordable Housing Systems in Vancouver, Portland and Torontorespected designers of affordable housing in Australia; and SGS Economics and Planning, one of the most respected
policy consultancies in Australia.
Over the past year, the research network has emphasized policy reform, arising from the development of Melbourne’s
latest metropolitan strategy (Plan Melbourne) and Victoria’s first integrated Affordable Housing Strategy (Homes
for Victorians), both of which were informed by Transforming Housing’s previous policy research. Our projects have
included:
»» Convening a second Affordable Housing Summit in June 2017 (the first was in May 2015) to determine action
research priorities for the project;
»» Working with the Lord Mayor’s Charitable Foundation to develop the Affordable Housing Challenge, a replicable
and scalable affordable housing project supported by local government and social investment;
»» Supporting and documenting another innovative and scale-able project, the Melbourne Apartment Project, which
provides shared-equity homeownership options for former public housing tenants;
»» Reviewing the current state of affordable housing need in Victoria and measures taken by state governments
across Australia to improve outcomes – summarized in this report for the Victorian State Parliament
»» Undertaking research on how various government bodies around the world define affordable housing, calculate
affordable housing need, determine suitable locations for affordable housing, and use government land to
maximise affordable housing benefit – summarized in this report
»» Convening a workshop and undertaking research on how various international jurisdictions are maximising the
benefits of public housing renewal and management transfer.
The Affordable Housing Crisis in Greater Melbourne
Transforming Housing is responding to an affordable housing crisis within metropolitan Melbourne, similar to crises
in many large and growing cities across Australia and around in the world. The standard understanding of housing
affordability has been that rent or mortgage plus utilities should consume no more than 30% of a household’s gross
income, particularly for lower income households (often calculated as the lower two quintiles of median household
income within a metropolitan region). More recently, an international comparative measure, called the median multiple,
is used to compare housing affordability. This is the median income of a metropolitan area, divided by median house
price. While this is a useful measure for ownership affordability, it tells us little about affordable rental housing or the
stock of housing for lower income households.
Lower income households spending more than 30% of gross income on housing-related costs are considered to be
in housing stress, with households spending more than 50% are considered to be in extreme housing stress. In this
report, we use the affordable housing definitions recently adopted by the Victorian State government, influenced by
our research, which uses the standard definition of affordability, as well as including appropriacy elements (housing must
have adequate number of bedrooms and be habitable). The emphasis is housing needs for very low income households
earning less than 50% of AMI, low income households earning between 50 and 80% of income, and to a lesser extent,
moderate income households earning between 80-120% of income.
A general mortgage lending guideline has been that the price of a dwelling should not be more than three times the
household’s annual income. The median multiple has increased from 4.7 in 2000 to 9.9 in 2018, well above levels that
the average household can afford.
TABLE 1. HOUSEHOLD INCOME CATEGORIES, INDICATIVE AFFORDABLE RENTS/DWELLING PRICES, GREATER MELBOURNE
Household income category Income/week Approximate % Affordable Affordable dwelling
rent/week $ purchase price $
$ (family) population
Very low (0-50% AMI) 0-771 25 0-231 0-120,276
Low (50-80%) 772-1,233 19 231-370 120,277-192,442
Moderate (80-120%) 1,234-1,850 20 371-555 192,443-288,662
Higher (120+) 1,851+ 36 556+ 288,662+
Sources: Palm, Raynor and Whitzman (2018), Tables 1-2 break down information by household size.
9 TRANSFORMING HOUSING TAP TURNERS AND GAME CHANGERS:
Lessons for Melbourne, Victoria and Australia from Affordable Housing Systems in Vancouver, Portland and TorontoAs Table 1 suggests, affordable dwelling purchase prices bear no resemblance to any units available in Greater
Melbourne, where the median unit price is well over $700,000. Median rents are currently affordable to most moderate
income households, at about $420/ week (whether they are available, in a 1% vacancy rate, is another issue, particularly
for lower income households). This data also suggests that trying to improve the affordability, size and location of
rental homes, as well as their tenure security, may be a better policy choice than trying to decrease housing prices to
the point where they could become affordable to the majority of Melburnians.
Increasing unaffordability of homeownership, as well as declining job security, has led to a shift from homeownership
to rental. A recent Transforming Housing report for the Victorian State Parliament summarises these trends. In 2006,
33.1% of households owned their own homes outright (with no mortgage), and 24.3% of households rented. Ten years
later, there was a 4% decline in fully owned homes – 29% - and a corresponding increase in renting households – 28.8%.
This decline is particularly apparent for young people. Between 1982 and 2013, the share of homeowners aged 25-
34 shrunk by more than 20%, and that age cohort is now more likely to rent than own a home. Rates of young adults
remaining in the family home have also increased from the 2006 to the 2016 census, as did the number of unrelated
young adults sharing dwellings, and even sharing rooms.
Increased pressure in the rental market has been exacerbated by the absence of a build-to-rent private market housing
sector. In Greater Melbourne, median weekly rent increased by 75% between 2006 and 2016 – almost double the rate
of median personal income. In 2005, 28% of available rental properties were considered affordable to the lowest 40%
of incomes. By 2017, only 6.6% were considered affordable. As the May 2018 update of the Rental Affordability Index
makes clear, for very low income households – pensioners, individuals on Newstart allowance (the main unemployment
benefit), single parents on benefits – there is virtually no affordable housing available to them within metropolitan
Melbourne. Social housing – comprising public housing owned by the state government as well as community housing
provided by non-profits – make up only 3.2% of the housing stock. It is thus unsurprising that homelessness – including
people living in extremely overcrowded or temporary accommodation, as well as those sleeping outdoors - has
increased by 11.3% between the 2011 and 2016 census.
The Australian Government estimates that 142,685 lower income renter households in Victoria were in housing stress in
2015/16. Building on recent work by Infrastructure Victoria and the Department of Health and Human Services as well
as methods of calculating affordable housing shortage used in other jurisdictions (some of which will be discussed in this
report), we have calculated a deficit of 164,000 affordable housing units in Victoria for lower income households,
with over 90% of the deficit in Greater Melbourne.
This is a deficit for the existing population. Greater Melbourne is growing by more than 2% per annum. Plan Melbourne
projects a need for 1.6 million new homes in the next 35 years. That is 46,000 homes a year, almost 30,000 of which
would need to be affordable to those earning 0-120% of AMI. So to redress the affordable housing deficit and meet the
needs of a growing population, the State Government would need a housing target of 47,000 units a year of affordable
housing aimed at very low, low and moderate income Victorians.
Deliberative Planning Partnerships for Affordable Housing: the roles of
government, the private sector and non-profits
Throughout this work, we have undertaken a deliberative planning approach based in partnership-building. We
draw on a body of work that argues that in order to develop more effective and sustainable ways to conduct policy, a
diverse and interdependent set of participants need to learn together and build an evidence base, build common
understandings, honestly agree and disagree, co-develop a course of action that is sustainable beyond electoral
cycles, and collectively take responsibility for results (Healey, 1997; Forester, 1999; Innes and Booher, 2010). There
are many valid critiques of deliberative planning: that it papers over power imbalances, and can be less effective than
agonistic or advocacy approaches (Mouffe, 2000; Allmendinger and Haughton, 2012). However, our previous research
has indicated that the current poorly integrated affordable housing system in metropolitan Melbourne - characterised
by tensions within and between scales of government, very weak policy that ignores available evidence, a lack of
consensus over fairly basic starting points such as the definition of affordable housing and the quantum of need, and
a highly politicized system that has seen a new 30 year metropolitan strategy developed with every change in state
government since 1995 - has been a major contributory factor to the affordable housing crisis. We can and must do
better.
In order to understand the necessity for affordable housing partnerships, we need to provide a brief overview of some
of the key actors and their roles, as well as the current affordable housing system context. In Australia, as is the case in
Canada and the US, direct provision of affordable housing through public housing construction and ownership has never
been a large component of the housing stock, as opposed to countries in Northern Europe such as England, Scotland,
Sweden or the Netherlands, or Asian city-states. The proportion of public housing, or even subsidized social housing,
has never been more than 10% of the total housing stock in any of these three countries.
10 TRANSFORMING HOUSING TAP TURNERS AND GAME CHANGERS:
Lessons for Melbourne, Victoria and Australia from Affordable Housing Systems in Vancouver, Portland and TorontoIn Australia, as in other countries, there has been a move to market-based solutions, associated with neo-liberal
belief that these ideas are more innovative and sustainable. Neo-liberalism has moved governments away from basic
provision of both infrastructure and services by governments, towards working in public-private partnerships. These
often engage multiple levels of government as well as non-profit and private partnerships in a networked approach to
governance. Research on these partnerships suggest that governments must provide strong steering through grants
and contracts, which in turn require an understanding of aims, targets, and preferred mechanisms informing contracts.
The problem is that public sector organisations have often been ‘hollowed out’ of policy officers who know how to
develop and manage partnerships (Milward and Provan, 2000). To give the example of affordable housing, as public
housing construction decreases, and policy interest wanes, governments often lay off staff who are experienced in the
economics of construction management or ways to calculate affordable housing need. As funding programs for social
housing end, non-profit developers lay off staff who are experienced in providing social housing on time and within
budget. Conversely, affordable housing systems that provide long-term policy, backed by stable infrastructure funding
over decades, attract and retain good staff.
These are three groups of actors in affordable housing networks and systems: government, the private sector and non-
profit organisations.
NATIONAL GOVERNMENT
In all three countries, the national government has the greatest influence on affordable housing provision, through
direct investment in affordable housing construction and rent/ ownership subsidies, indirect investment through
tax subsidy, and other mechanisms including foreign investment regulation and immigration policy. In Australia, the
Commonwealth government collects almost 80% of total tax revenue, with the state governments collecting almost
17% (and also obtaining money through tax transfers from the Commonwealth government), and local governments
collecting about 3.5%. National government policy in all three countries overwhelmingly benefits homeowners over
renters, and supports housing as a source of speculative wealth generation (rather than housing as an essential
social need).
In Australia, housing investors (including those who own multiple properties) collectively obtain about $11.7 billion
annually in tax relief because of capital gains tax exemptions on property sales and negative gearing exemptions
on investment losses. These tax exemptions, which primarily aid the wealthy, are an important factor in housing
speculation. Housing speculation, in turn, leads to the cost of housing outstripping wages and the development of two
classes of households: those benefiting from wealth creation through housing, and those households locked out of that
market. Tax exemption policies promoting wealth creation through housing speculation result in lost revenue that might
more productively go into infrastructure investment in housing, transport, and social/ health services.
The foregone revenue from homeowner tax exemptions is considerably greater than the amount directly spent by
the Commonwealth, state and territory governments combined on social housing and homelessness services: $4.7
billion in 2016/17, which comprises 2.1% of total government expenditure. The majority of this cost is borne by state
governments, with only $1.5 billion committed by the federal government in 2018/19.
The Commonwealth government also provides $4.4 billion on Commonwealth Rent Assistance, a subsidy provided to
low income households that assists them to rent in the private market. However, the subsidy has not kept pace with
inflation and does not cover the gap between market rent and an affordable rent for lower income households in most
Australian capital cities. Rent assistance also does not address the severe shortage of affordable housing dwellings
available for rent.
Australia did have two affordable housing programs in the last 10 years, although both were terminated after the
current Coalition government was elected in 2013. The Social Housing Initiative (SHI) was part of a larger economic
stimulus package delivered in response to the Global Financial Crisis of 2007/08. The Commonwealth government
provided funding of $5.638 billion to the SHI over three and a half years (2008-09 to 2011-12), mostly to new
construction. The short-term program provided 19,700 new social housing dwellings, as well as keeping 12,000 existing
social housing dwellings inhabitable through repairs and maintenance. It also resulted in 14,000 full time equivalent
construction jobs. Despite a favourable evaluation by external consultants, the program was not continued by the
current government.
Victoria only received 22% of funding from this program, despite comprising almost 26% of the nation’s population.
Still, if the program had continued over the seven years to the present, this program might have resulted in
approximately 10,000 new and a further 6,000 renovated social housing dwellings in Greater Melbourne, a yield
300% higher than current Victorian social housing targets of 4,700 dwellings over five years.
Another housing program associated with the national economic stimulus package was the National Rental Affordability
Scheme (NRAS). This program had a longer life: introduced like the SHI in 2008, it was discontinued in 2014. The aim of
11 TRANSFORMING HOUSING TAP TURNERS AND GAME CHANGERS:
Lessons for Melbourne, Victoria and Australia from Affordable Housing Systems in Vancouver, Portland and Torontothe program was to stimulate the construction of new affordable rental units, including apartments as well as houses.
The units were aimed at moderate income households, with both minimum and maximum income requirements.
A 10 year subsidy was provided by government so that units would be available at 80% of area median rents. The
Commonwealth, state and territory governments provided initial joint funding of $622.6 million from 2008-2012 for this
program, although the Australian government later costed the program at $6 billion. Despite falling short of its target
of 50,000 rental dwellings in four years, the program delivered 27,603 dwellings with a further 9,980 to be delivered, by
June 2015. According to Table 4 of this report, only 16% of these units were constructed in Victoria, due to absence of
‘shovel ready’ project bids from Greater Melbourne.
Evaluations of government programs, including NRAS and SHI, suggest that the longer a program is in place, the more
efficient and effective it is. A good example discussed in this report is the US Low Income Housing Tax Credit (LIHTC),
introduced in 1986, responsible for 3 million affordable dwellings over three decades. Negative gearing has been in place
in Australia since 1985. The absence of long-term affordable housing policies and programs at the national level has
made partnerships with this level of government difficult, despite its importance.
The LIHTC was predictable. So we built an affordable housing sector around it because
it didn’t go away.
(Andy Broderick, social investor in Vancouver; previously a social housing developer in Vermont, US)
STATE GOVERNMENT
In most of Australia and Canada, urban and regional planning policy is developed by the second tier of government
(this second tier is called state government in Australia and the US, and provincial government in Canada). Vancouver
and Portland are unusual in that they have a metropolitan level of government that is responsible for planning the
city-region. Planning for affordable housing in proximity to transport, employment and services has been recognised
as critical to metropolitan and regional economic prosperity, population health and environmental sustainability
(reducing pollution and urban sprawl). In recognition of the critical nature of housing affordability to economic, social
and environmental welfare of citizens, the Victorian State Government has recently included “the provision of affordable
housing” as an objective of its Planning and Environment Act. Planning policy mechanisms include setting targets, such
as mandating numbers of new dwelling units in a local government area or proportion of new units that are affordable to
lower income households. The Victorian State Government has not set affordable housing targets for local governments,
but it has mandated new sub-regions in Greater Melbourne to do so in Plan Melbourne. There is an overall target of
4,700 new or renovated social housing units over the five year period 2017-22 in Homes for Victorians.
One way to meet affordable housing targets are sometimes facilitated through Inclusionary Zoning, which requires
developers to provide either a proportion of the units they develop at a set rent or purchase price, or provide either land
or money towards affordability housing in lieu of direct provision. The Victorian State Government has introduced a
voluntary pilot inclusionary zoning trial on government land that is intended to produce 100 new social housing units by
2022.
The Victorian State Government also directly manages public housing stock – almost 63,000 units in the state. The
Victorian Auditor General’s Office has identified absence of sustainable long-term direction and financing as a factor in
the net loss of public housing stock in the last 10 years. It has also warned that the aging nature of these dwellings –
built an average of 35 years ago and poorly maintained – means that substantial new investment is necessary. The state
government has responded by transferring stock to non-profit organisations such as Aboriginal Housing Victoria, and
selling off public land to private developers in return for a minimum 10% uplift in social housing dwelling units as part of
redevelopment.
State government is also responsible for laws governing renters’ rights. Greater Melbourne has a rapidly increasing
proportion of renter households, and renters are more likely than owners to be in housing stress. Australia has some
of the weakest laws protecting renters in the world, in terms of protection against rent increases that vastly outpace
increases in wages, promoting tenure rights, and prosecuting practices such as asking tenants to pay rents much higher
than the advertised price. In some places, this work is done by local government. As discussed in this report, Portland
is a city that through its planning mechanisms, seeks to maintain rental stock by limiting conversions of existing rental
buildings to condominiums. Portland and Vancouver are also exploring limiting rent increases to annual inflation rates.
Although these regulations are enacted by the local level of government, the permission to enact this legislation, like
the permission to enact inclusionary zoning, comes from the state government. The Victorian State Government has
recently adopted legislation to only allow rent increases every 12 months, instead of six months; to limit landlords
‘bidding’ for rents; to make it easier to allow pets; and to limit grounds for evictions.
12 TRANSFORMING HOUSING TAP TURNERS AND GAME CHANGERS:
Lessons for Melbourne, Victoria and Australia from Affordable Housing Systems in Vancouver, Portland and TorontoDesign regulations can affect the price of new and existing housing, as well as their longer term management costs
and suitability to an aging population. While Australia has a National Energy Ratings System, it is the state government
through their Buildings Codes that enforce minimum energy ratings. While this can add to costs of construction, it can
also decrease energy costs of the life of a building. Similarly, there are national universal access standards for people
with disability, but the state government is responsible for enforcing, or otherwise encouraging, minimum access
standards. The Victorian State Government has signalled its intention towards mandatory, as opposed to voluntary,
minimum access standards.
While all levels of government own suitably located and zoned land for affordable housing, it is often state government
that has the most and best land for this use. Surplus property, whether it be former schools, hospitals, or road
allowances, can be leased or sold at low or no cost, either to the state’s own housing development agency or to private
or non-profit developers, in return for an expected number of affordable housing units. The Victorian State Government
is currently using this mechanism in its public housing renewal and inclusionary zoning pilots. It has also leased land on
a road allowance to the non-profit housing provider Launch for ‘temporary’ housing for homeless people on a five year
lease.
State government has much more limited tax levers than national government. But it can provide direct funding and
also guarantee loans and mortgages. It can borrow money from institutional lenders and offer bonds to finance
affordable housing construction, as is the case in Oregon. It can also offer tax rebates and other incentives. In this
report, we will discuss the critical role of the British Columbian [BC] Government in supporting social housing over the
past 20 years through these mechanisms. The Victorian State Government has committed $1 billion in direct funding
and another $1 billion in loan guarantees over five years to support social housing in Homes for Victorians. It has
also provided stamp duty exemptions and concessions to first time home buyers purchasing lower cost dwellings, with
stamp duty being a tax applied to land transfers.
Finally, the Victorian State Government provides homelessness services, including short-term shelters and assistance
in finding private rental housing, and also funds services attached to housing for low income people with mental health
issues and/or disabilities.
LOCAL GOVERNMENT
In Canada, the US and Australia, local governments are a relatively powerless third tier of government. They can be
provided with additional powers by higher levels of government. The City of Vancouver is allowed to take on debt,
charge special taxes such as development charges, and give grants due to a special act of the BC government. The
Oregon State Government and Ontario Provincial Government have recently allowed local governments (including
Portland and Toronto respectively) to mandate inclusionary zoning, and Oregon has also allowed local governments to
issue bonds for affordable housing construction.
Local governments are usually charged with planning decision-making. Local zoning decisions have an impact on
the amount of multi-unit buildings or smaller dwellings that can be constructed in well-located areas with good
infrastructure. Addressing development uncertainties (fast tracking development by waiving third party objections
from neighbours of new developments that may delay or stop development), waiving development charges or
property taxes (called ‘council rates’ in Australia), and providing government land are all mechanisms that have been
used by some of the 32 local governments within Greater Melbourne. In Greater Melbourne, the City of Port Phillip, a
local government just south of the central city, has provided an exemplary model over the past two decades.
Vancouver and Portland have gone well beyond traditional local government responsibilities to become leaders in
affordable housing policy and delivery. In doing so, they have trialled innovative approaches that have then scaled up
to second tier and national governments.
PRIVATE SECTOR DEVELOPERS
Private sector developers deliver the vast majority of new housing stock – over 95% - in Australia, Canada and the US.
Most of that housing stock is built for individual buyers, comprising both people buying houses as primary residents
and Australian-based and international investors. As discussed above, governments provide both incentives to support
affordable housing supply, and regulations to shape the nature of housing supply. In Australia, incentives are much
more commonly used than regulations or requirements. The majority of NRAS subsidy went to private developers.
Private developers have also taken the lead in redeveloping public housing in Melbourne (as in Toronto, but not in
Vancouver), in return for well-located government owned land on which they can erect luxury housing, by which is
meant housing that is not affordable to lower and moderate income households. Private developers are also the main
target of the voluntary inclusionary zoning pilot in Victoria. Architects and construction companies are two other
examples of private sector contributors to affordable housing.
13 TRANSFORMING HOUSING TAP TURNERS AND GAME CHANGERS:
Lessons for Melbourne, Victoria and Australia from Affordable Housing Systems in Vancouver, Portland and TorontoNON-PROFIT HOUSING PROVIDERS AND ADVOCATES
Non-profit housing providers are a small part of the overall housing system in Australia, although they are increasingly
important actors in affordable housing delivery and management. They were active in the SHI and NRAS schemes, and
have also worked with private developers in public housing renewal and are expected to work with developers in the
inclusionary zoning pilot.
Advocates for affordable housing can include representatives from anti-poverty organisations, local government
officers, and philanthropic organisations. They rarely have continuing and sustainable funding and are most effective
when they form larger coalitions to engage the general public as well as their core constituency of lower income
individuals and families.
INSTITUTIONAL INVESTORS
Institutional investors, such as banks and retirement savings funds, hold enormous amounts of capital on behalf of
individuals and companies, far more than national governments. For instance, superannuation funds (the term for
retirement savings funds in Australia) hold $2.6 trillion in assets. NRAS was intended to unlock some of that institutional
investment, but as discussed above, the lesson from the Low Income Housing Tax Credit in the US is that it takes at
least a decade of consistent policy and programs before risk is felt to be at acceptable levels for many large investors.
There is a growing philanthropic or social investment sector in Australia, the US and Canada, but it is still a much smaller
sector, comprising a total of well under $1 billion.
To conclude, providing housing for low income people well below market rents requires a range of reinforcing measures
from all levels of government. These include: development finance (provided directly by government and/or indirectly
through an incentive such as a tax subsidy), rent subsidy (directly through funding to a housing provider, or indirectly
through a portable housing allowance), supportive regulation (such as inclusionary zoning, rent control and affordable
housing targets) and sometimes design innovation (usually through incentives but sometimes regulated e.g, energy
efficient buildings or universal access). To give the example of the Launch Housing social housing project in western
Melbourne, subsidy is provided by a philanthropic investor and state government; land has been leased for minimal
cost by the state government; planning approvals have been facilitated by a local government; and design innovation
through portable modular housing has been provided by an architecture firm. The housing has been developed and will
be managed by a non-profit organisation. Layering multiple sources of funding, negotiating regulation of various levels
of government, and providing inexpensive but excellent design, requires sophisticated understanding of a complex
system. Partnerships assist in mutual learning and also in shaping an opaque and constantly changing landscape of
barriers and enablers to affordable housing.
Learning from Affordable Housing Partnerships in Comparable Cities
Transforming Housing’s initial research suggested that good practices from elsewhere were not necessarily known by
Melbourne decision-makers, whether they be government policy makers, private or non-profit housing providers, or
investors. We therefore organised a study tour in March 2014, with a private developer, local government planner
and non-profit housing provider as co-researchers. We met with over 50 affordable housing actors in San Francisco,
Portland and Vancouver, three cities with similar housing affordability issues to Melbourne who were identified in the
literature and/or by activists and researchers in these three cities as having innovative affordable housing programs.
In February-March 2015, the Transforming Housing lead researcher, Professor Carolyn Whitzman, returned to Portland
and Vancouver in order to further investigate affordable housing partnerships in those two cities. I also travelled to
Toronto and interviewed key affordable housing actors in Melbourne. I interviewed a total of 30 affordable housing
actors in these four cities (see Table 2).
14 TRANSFORMING HOUSING TAP TURNERS AND GAME CHANGERS:
Lessons for Melbourne, Victoria and Australia from Affordable Housing Systems in Vancouver, Portland and TorontoYou can also read
